Nick Rosa on finding the sweet spot

Nick Rosa, 62, graduated from Northern Illinois University in 1973, majoring in political science with no particular idea why, except that the turbulent times excited him.

“I was waiting to get drafted. My number was 26. In those days, you were going to go if your number was under 100. For four years, I knew I’d probably get drafted. I was waiting around to get drafted and in the summer of 1973, the draft ended.

“Meanwhile, I worked a construction job for a homebuilder, Campanelli Bros. of Schaumburg.”

After Rosa got laid off in 1974, he earned an MBA at DePaul University, where economics professor Clovis De Silva offered him a chance to spend six months in Kuwait studying the country’s economic opportunities other than oil. “It was fun, and I got my first taste of the international world,” said Rosa, now managing director at Sandbox Industries, a Chicago-based startup investor and incubator.

Sandbox Innovation Partners, funded with about $1 million in Sandbox seed money, got its start about four months ago, and is working with four employees and a network of about 40 people scouting the globe for startups.

“In 2014, we’ll hire a couple of smart people. We’ll have no idea what they will do. That’s why I like coming to work every day.”

Allow for surprises

Rosa’s big break came in 1980, when he joined G.D. Searle & Co. as a member of the financial analysis team, a corporate-level position. Searle’s CEO was Donald Rumsfeld, who later would become secretary of Defense under Presidents Gerald Ford and George W. Bush.

In chronicling his career, Rosa spies a common thread — his financial studies and skills, what he calls “a core that I could go back to,” regardless of his position.

St. Louis-based herbicide-maker Monsanto merged in 1985 with Searle, maker of the successful sugar substitute NutraSweet. Searle’s general counsel, Robert Shapiro, was tapped to head the NutraSweet business, and he hired Rosa in business development.

The lesson?

Searle’s scientists were trying to find a cure for ulcers when researcher James Schlatter accidentally created NutraSweet.

“The concept still influences me today,” Rosa said. “(Schlatter) was combining amino acids. He combined the two that make up NutraSweet. He licked his finger while picking up filter paper and realized it was sweet, very sweet.

“It was really a courageous thing to capitalize on the accidental discovery.

“We turned (NutraSweet) into a business that was incredibly profitable, with nearly $1 billion in sales. We created the branded ingredient strategy — the first time an ingredient had ever been branded.”

That brings Rosa to another lesson: Sometimes it’s good not to know a lot about the field you are entering. “There is no way we would have priced NutraSweet at such a high price if we had been in the industry. We said, ‘Gosh, this is better than saccharine and even better than sugar . . . so let’s price it twice that of sugar.’ ”

Private investment firm J.W. Childs Equity Partners II bought the NutraSweet Co. from Monsanto in May 2000 and took it private. The patent had expired, and it found itself facing slower growth and pricing battles with rivals. Rosa left NutraSweet in 2002, tried retirement for about a year and got bored.

Incubator as maverick

Rosa and Shapiro spent lunches and a few dinners talking about their next move.

They started Sandbox Industries 11 years ago with $4 million to create new companies and bring new technologies to market.

The idea to operate an incubator required more capital than expected, so Sandbox raised an $18 million fund, which led to Sandbox managing a corporate venture fund for Blue Cross-Blue Shield.

“Bob Shapiro named it. Sandbox is the playful part. There is the serious ‘we have to create returns,’ and that is Industries. That’s our yin and yang: Be creative, fun and playful, but adhere to metrics.”

“We never set out to be fund managers, but we developed a skill at bridging big corporate investors and the entrepreneurs they were interested in investing in. Our limited partners can make our investments successful — they can buy a company.”

“I am attracted to and I like to create a little bit of rebellion. I sort of had a reputation at Monsanto of bucking the system; breaking the rules. We broke the rules, doing among the first casual Fridays and having open offices without walls.”

Sandbox is constantly changing.

“It started with a lot of white boards and smart people identifying problems. We had a wall of pain. We brainstormed 500 ideas to get two, three or four.”

Successes? Marbles the Brain Store, market research startup Lab42, dog accessories retailer doggyloot and AP test prep firm GetAFive. “We’re looking for companies that might blindside the bigger companies at some time in the future.”

As for his own success, Rosa credits such excellent mentors as Shapiro and Rumsfeld, who respected “an alternative voice,” and his late parents, Nick and Shirley, who gave him loads of confidence and a terrific work ethic.

Rosa tried to balance his own family life, and found it a challenge. “I thought it was important to refresh and spend time with my kids. When you’re working on exciting companies that are growing fast, a big challenge is to not let that consume you.”

Rosa’s son Nicholas, 29, is co-founder of doggyloot, and Luke, 28, is the White House advance coordinator for President Barack Obama.